THE COST OF LIVING IN TANZANIA IN THE 1970s

As elsewhere in the world, the cost of living in Tanzania has risen considerably in recent years, though the impact has been unequally divided between town and country. In peasant farming areas the increase has been substantially cushioned by the absence of a wage-cost element in domestic agriculture. The increased burden on peasant families has, therefore, been largely confined to the items bought for money, such as clothing and utensils, but as their money income is small the volume of such purchases is likewise limited. Other increased money costs are fuel and transport. But these increases have been largely offset by the growth in money incomes arising from the sale of crop surpluses. Thus, between 1970-71 and 1976-77 the price paid to the peasant producer of marketed maize rose from 23 cents per kilo to 80 cents per kilo, an increase of 220%. Similar increases in rice and wheat prices are recorded. These rises in price were deliberate acts of government policy to compensate peasant growers for the effects of inflation and to encourage increased food production in the face of the serious food shortages in 1974 and 1975.

While the peasant farmer in many areas probably enjoys an improved standard of living as the result of higher market prices for his product, the main brunt of increased prices has fallen on the towns, where normally there is little chance to eke out food requirements by home production. The impact of price rises can be seen from the national consumer price index, which rose by some 132% between 1970 and March 1977. This rise contained an increase in food prices of 169.6%, in fuel, light and water of 207.8%, in transport of 172.6%, in furniture and utensils of 151.3% and in clothing and footwear of 125.4%. Only rents show a fall of 61.7% following the nationalisation of buildings in April 1971. As food occupies 47% of the consumer basket, the price of food exercises a strong influence on the general index.

Food prices increased dramatically between December 1973 and December 1974, by no less than 77.5% causing the general index during that period to rise by 40.5%. An important cause of this drastic increase was the serious drought, which severely curtailed home production of food and enforced on the government a large import programme of food grains at high world prices. The subsequent recovery of domestic food production under the stimulus of better weather, higher buying prices for peasant farm surpluses and the national campaign caned Kilimo cha Kufa na Kupona (Cultivation for Life or Death) enabled the government to reduce and ultimately to terminate food grain imports. The ending of food imports and the recovery of home production arrested the growth of food costs and even caused a small diminution of the food index by almost 10 points between December 1974 and December 1975.

Food prices then remained stable until the end of 1976, when the upward trend was resumed in the first quarter of 1977 with repercussions on the general index. The food price index rose during this period by 17.9% and the general index by 13.3%. Meanwhile the index for fuel, light and water showed an increase of 69.7%. On the other hand, clothing and footwear prices remained unchanged, while furniture and utensils actually fell by 20 points. The higher cost of food is said to have been due to higher prices for vegetables and fruit, while the rise in fuel costs was laid down to a steep increase in the price of charcoal and firewood.

While the national consumer price index gives a picture of the urban areas of Tanzania in general, the Dar es Salaam price indices paint a picture of life In the former capital. There are two such indices, both based on a household budget survey carried out in 1969, one relating to wage earners with an income at that time of shs. 2,OOO to shs. 4,000 per annum, the other to middle grade civil servants earning shs. 3,OOO to shs. 20,OOO per annum. The indices constructed on the basis of this information are published against a base line of 100 in 1969, but in the following paragraphs they have been converted to a base line of 100 for 1970 for comparison with the national index.

The fact which springs immediately to mind in comparing the national indices with those for Dar es Salaam is the steeper rise in Dar es Salaam prices, amounting to 248% between 1970 and March 1977 for wage earners. In the same period food prices rose by 274%, a very serious increase for wage earners most of whom depend on the shops for their supplies. During the same seven year period the rise in prices for middle grade civil servants was nothing like as steep, being 141% or only marginally greater than the rise in the national index, while the rise in food prices for this income group was 186%.

Still, the rise in consumer prices has undoubtedly reduced the standard of living of the salaried class. With effect from 1st May 1974 civil service salaries were increased by 15% for the first time since 1961, except for a few upward adjustments in starting salaries. No further change has been introduced since that date. However, in view of the exceptional hardships imposed on the urban civil servants in the lowest ranks – messengers and the like – by the prices explosion, the basic starting salary was increased for wage earners from sh. l80 per month (shs.2,160 p.a.) in 1970 to shs. 270 per month (shs. 3,240 p.a.) in 1972 and shs. 340 per month (shs.4,080 p.a) in May 1974. This represents an increase of 88.9%. In the same period the index for wage earners rose by 55% and so also did the group index for food. Thus, in the middle of 1974 wage earners were more than compensated for price rises since 1970. The salaried grades, on the other hand, received an increase of only 15%, while the index for middle grade civil servants rose by 43% and the group index for food by 39%.

This adjustment was in line with the general policy of the government to reduce salary differentials; it also had the effect of reducing differentials in real income by making the upper grade civil servants in real terms poorer and the lowest grades richer. Unfortunately this did not last. The subsequent steadily upward trend in prices, especially the sharp upturn in the index in the first three months of 1977, must have caused serious difficulties for families in the middle grades, but its effects on the lowest grades must have been particularly severe. Since 1974 the basic starting rate in the civil service rose to shs. 380 per month (shs 4,560 p.a.), an increase of ll.8% while the price index for wage earners rose by l24.5%, the food index rising by almost exactly the same amount. It is clear, therefore, that the March 1977 level of food prices, 243% above the 1970 figures, must have produced serious hardship among the lowest paid in Dar es Salaam, whose incomes had risen only 111% in the same period.

Food prices in Dar es Salaam may recover from the sharp upturn in the first quarter of 1977 which may have been caused by some temporary problem with supplies. It is likely, however, that any permanent upward shift in price levels will not be continued for long without a corresponding upward adjustment of salaries in the lower ranges.

Roger Carter

1 Comment »

  1. Tanzanian Affairs » CHANGES IN THE STANDARD OF LIVING said,

    November 24, 2011 at 4:30 am

    […] January, 1978, in Bulletin of Tanzanian Affairs No.5 we reported on the trend in the cost of living in Tanzania down to the beginning of 1977. Since […]

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